The key lies in adhering to five key principles: Buy Experiences (research shows that material purchases are less satisfying than vacations or concerts); Make it a Treat (limiting access to our favorite things will make us keep appreciating them); Buy Time (focusing on time over money yields wiser purchases); Pay Now, Consume Later (delayed consumption leads to increased enjoyment); and Invest in Others (spending money on other people makes us happier than spending it on ourselves).

In the following video, the first in a series, Norton doles out some cash to two women in Harvard Square on a sunny summer day. The catch: Each of them must take the money and spend it on an experience.

"One of the most common things people do with their money is get stuff," explains Norton, an associate professor of marketing at Harvard Business School. "But we have shown…in research that stuff isn't good for you. It doesn't make you unhappy, but it doesn't make you happy. But one thing that does make us happy is an experience."

Watch the video to find out why Norton believes that taking a trip yields more happiness than, say, buying a necklace—and to find out whether the women in Harvard Square end up happier.